origins and destinations, and were made to harmonize with the differential adjustment voluntarily established by the carriers in the year 1911. A key rate of $3.15 was prescribed from the Canton, Ohio, group to Chicago, and other points in that vicinity, and from producing points east of the Canton group, certain differentials were added to the Canton-Chicago rate. A base rate of $1.75 was prescribed from the Danville, Ill.-Attica, Ind., group to Chicago, and rates from other producing points in Illinois and Indiana to Chicago and other points in that vicinity were fixed differentially over or under the base rate from the Danville-Attica group. A specific commodity rate of $6.60 was prescribed between Chicago and New York and other long-haul rates made on the group plan, related thereto. From the Canton group, near the center of which Mineral City is located, the rate to New York was and is 71 percent of the Chicago-New York rate, or $4.70. For short distances in central territory, the rates prescribed ranged from 90 cents for 20 miles, to $1.97 for 150 miles. While complainant ships its commodity to destinations in various other States, over 50 percent of its shipments in 1931 were to points in Ohio and Pennsylvania.

Complainant does not contend that the rates assailed were unreasonable under conditions existing when they were prescribed, and in fact states that but for changed economic conditions its complaint would not have been filed. Its case is based largely on the fact that the price of its commodity at the present time, and which it assumes will continue, is about one third of the value shown in the General Brick Case when the present rates were established. It urges that under present economic conditions it cannot market its product under these rates except to a very limited extent and at nearby points. It is complainant's position that consideration should be given to the relation between rates and commodity prices, and that the present rates should be reduced 40 percent, or to the basis in effect in 1913, at which time the price of its commodity was the same as now. This position is further predicated upon the basis of the general commodity prices as of the present time as compared with the general commodity prices of 1913.

Complainant is particularly interested in reaching the eastern markets. The following statement shows the rates from Mineral City to New York, Boston, Philadelphia, and Baltimore, in effect in 1913, the present rates, and the average f.o.b. plant price at Mineral City received by complainant for hollow building tile in 1913, 1922, and 1932:

Complainant states that the rates on his commodity have increased 82.57 percent since 1914, and compares this percentage increase in rates with the decrease since 1922 of 43.7 percent in its f.o.b. plant value of building tile. It states that the average distance its shipments moved in 1931, was 228 miles, and that while in 1913-14 the delivered price paid for freight was 34 percent, in 1931, it was 50, and is now 55 percent. To nearly all destinations east of Pittsburgh, Pa., the freight rate is more than the selling price. Complainant recognizes the fact that there is not as great a demand for its material as formerly, building construction having fallen off sharply within the past few years; also the fact that the present economic conditions, as they affect its product, do not differ materially from those affecting other industries. It states that while these conditions are a matter of common knowledge, and were before us in the Fifteen Percent Case, 1931, wherein we authorized certain increases, including an increase of 20 cents per ton on building tile, the evidence in that proceeding warranted a decrease in rates, rather than an increase.

Complainant compares the average earnings under the rates assailed with the average earnings on all traffic in the eastern district, it being contended that the latter earnings are less than those on building tile. It is unnecessary to discuss these comparisons, as we have repeatedly held that the reasonableness of any rate cannot be measured by comparing its earnings with the average earnings on all traffic, because if the reasonableness of rates were so measured, the inevitable result would be to bring all rates to a common level. In referring to such comparisons, in the General Brick case we said: The impracticability of using the revenue on all freight as an exact yardstick by which to measure the rates on a particular commodity, even though it be low-grade traffic, is illustrated by the circumstance that in Illinois Zinc Co. v. Director General, 61 I.C.C. 92, this theory was applied successively by complainants therein to ore from the mines to spelter from the smelters, and to sheet zinc from the rolling mills. In this case it could be successively applied to common brick and to the higher grades of brick. If we were to accept the theory that rates on all low-grade commodities should be reduced solely if and because they produced a higher revenue than the average of all freight, such a reduction would result in a lowering of the average which, in turn, would require a further reduction in the rates on the low-grade commodities, and this theory could be extended ad infinitum. [Pages 230-231.]

See also Hilgartner Marble Co. v. B. & O. R. Co., 144 I.C.C. 99, 104, and cases there cited.

Defendants state that, while the average value of building tile at complainant's plant in 1931 was $2.80 per ton, the average value of all grades of this commodity for the United States as a whole during that year was $5.34. They urge that complainant's difficulty is due to a decline in building activity, rather than to the level of the freight rates, contracts for construction in 1931 being about 50 percent of those in 1925.

Building tile is manufactured at various places east of Pittsburgh, and because of the tendency toward localization of consumption, under any general revision downwards, the local manufacturers would still have an advantage over the more distant plants.

In Terre Haute Cham. of Com. v. Atchison, T. & S. F. Ry. Co., 176 I.C.C. 275, decided June 13, 1931, where in adhering to our finding that the rate prescribed in the General Brick case from Terre Haute, Ind., to Chicago, Ill., was not unreasonable, we stated: Prior to the general rate advances complainant's market covered 24 States * * Since the general rate advances and due in part to the development of local plants in the Northwest, South, and Southwest, complainant has been practically eliminated from these distant markets. Because of similar situations some large drain tile manufacturers are now manufacturing building tile, thereby creating an overproduction of that commodity and forcing complainant out of the Chicago market for which its plants were built. 277-278.]

[Pages

As heretofore indicated the underlying ground of this complaint is that freight charges on the commodity here considered have not been reduced, although there has been a substantial decline in the value thereof. This was one of the primary grounds for the rate reductions sought by shippers in the General Rate Level Investigation, 1933, 195 I.C.C. 5. For reasons stated in our report in that proceeding, a summary of which is set forth beginning on page 66, we concluded that no general reductions were warranted. We further stated that there was not sufficient evidence to determine what reductions, if any, should be made in rates on particular commodities. The present record discloses little evidence in addition to what was considered in the case above cited. It deals with the rates on building tile from but one producing point in a key group, the rates from this group constituting an integral part in the brick rate adjustment in central and trunk-line territories. We are of the opinion that the evidence is insufficient to support a finding that would occasion a disruption of the adjustment prescribed in the General Brick case.

We find that the rates assailed were not and are not unreasonable. The complaint will be dismissed. 198 I.C.C.

FOURTH SECTION APPLICATION No. 15096

COAL TO ST. LOUIS DISTRICT

Submitted July 28, 1933. Decided January 23, 1934

Authority granted, on conditions, to establish and maintain rates on coal and coal briquettes, in carloads, from mines in Maryland, Pennsylvania, and West Virginia to East St. Louis, Ill., St. Louis, Mo., and related points, without observing the long-and-short-haul provision of section 4 of the Interstate Commerce Act. All other and further relief prayed, denied. J. B. McCorkle and Roy S. Kern for applicant.

REPORT OF THE COMMISSION

DIVISION 2, COMMISSIONERS AITCHISON, PORTER, AND TATE BY DIVISION 2:

The Pennsylvania Railroad Company, for itself and on behalf of other carriers named in its tariffs, A.A. I.C.C. nos. 2035 and F-1958, as amended, applies for authority to establish and maintain rates on bituminous coal, cannel coal, and bituminous briquettes, in straight or mixed carloads, from mines and stations in Pennsylvania, West Virginia, and Maryland, named in the above tariffs, to East St. Louis, Ill., St. Louis, Mo., and certain points in the East St. Louis switching district, hereinafter referred to collectively as St. Louis, without observing the long-and-short-haul provision of section 4 of the Interstate Commerce Act. A hearing was held on this application. Rates and differentials will be stated in cents per net ton.

The origin points are in the northern part of the so-called Inner Crescent and Outer Crescent districts and nearby coal groups. The present rates from the inner and outer districts to St. Louis are $3.57 and $3.72 respectively. Applicant seeks authority to establish rates of $3.12 and $3.27 respectively, to St. Louis, without reducing rates from and to the intermediate origins and destinations. The proposed route is over the main line of the Pennsylvania through Pittsburgh, Pa., Columbus, Ohio, and Indianapolis and Terre Haute, Ind. This route traverses origins in the No. 8, Middle, and Coshocton districts of Ohio from which the present rates are $3.25 to four intermediate destinations in Illinois and $3.32 to 26 intermediate destinations in Illinois and St. Louis, and higher rated destination groups in Illinois, to which the rates range from $3.19 to $3.57 from the Inner Crescent district, and from $3.34 to $3.72 from the Outer

1 Rose Lake Yard, Madison, and Granite City, Ill.

Crescent district. Applicant also proposes to establish reduced rates from certain other origin groups in Pennsylvania and Maryland constructed on the bases of the present differentials over the proposed rates from the Crescent districts.

Relief is based on market and carrier competition. Applicant desires to place mines served by the Pennsylvania and its connections in the northern part of the Crescent districts on a parity with those in the southern part of the districts on traffic to St. Louis. The same kind of coal is produced in both. The record indicates that formerly a parity of rates was maintained. The rates were first reduced to the proposed bases by direct routes serving mines in the southern part of the districts, in Kentucky, Virginia, and West Virginia. By fourth-section order no. 10540, as supplemented, entered in application no. 14241, certain indirect lines or routes from the southern part of the districts were granted relief, without imposition of the equidistant provision, to meet the $3.12 and $3.27 rates to St. Louis and continue the rates to higher rated intermediate destination groups. By order no. 11295, entered in fourth-section application no. 14798, Coal From Kentucky, Virginia, and West Virginia, 194 I.C.C. 727, other indirect routes serving the southern Crescent districts were granted similar relief. Peoria and St. Louis groups, traversed by indirect routes from the southern part of the Crescent districts under authority of order no. 11295 are intermediate on the proposed route of the Pennsylvania. The rates thereto, creating departures for which relief is sought herein, are $3.19 and $3.34 to the Peoria group, and $3.57 and $3.72 to the St. Louis group, from the inner Crescent and Outer Crescent districts respectively. The intermediate destination grouping is of long standing. The proposed rates were recently established by the Baltimore and Ohio Railroad Company from mines on its lines and connections in the Crescent districts adjacent to that part of the districts served by the Pennsylvania and its connections. The Baltimore & Ohio does not traverse the higher rated intermediate destination groups involved herein and its rates comply with section 4. Certain so-called short feeder lines from which these rates apply in connection with the Baltimore & Ohio are embraced in the instant application. It is contended that mines in the northern part of the Crescent districts are unable to market coal at St. Louis in competition with mines in the southern part of the districts under the existing disparity of rates.

The lowest earnings over the proposed route would result under the $3.27 rate and are 4.34 mills per ton-mile and 21.73 cents per car-mile, based on carloads of 50 tons, for an average distance of 752.2 miles. These appear to be reasonably compensatory.